UAE: Banks say insurers refuse to insure mortgagors over 70
Source: Middle East Insurance Review | Dec 2019
Banks in the UAE said they are unable to comply with a new banking regulation which allows banks and finance companies to grant mortgage loans where the final repayment is scheduled for after borrowers turn 70. This is because insurers are refusing to insure mortgagor beyond the age of 70.
The central bank issued a decision on 10 October, stating it would ease home loan requirements imposed on customers of banks and finance companies, reported Emirates Today. Amendments to the banking regulations include the cancellation of the maximum age requirement for a borrower to repay the last loan instalment, regardless of the nationality at the time of the last payment.
Bankers told Emirates Today that insurance is refused beyond the age of 70 because of the high risk.
Banking expert Ahmed Arafat said there are two types of insurance banks typically require from a mortgagor, namely: life insurance and insurance on the mortgaged property against fire, short circuits and other events.
The Insurance Authority (IA), in its turn, has said that with the lifting of the maximum age of mortgagors, an insurer is able to provide coverage on a case-by-case basis, matching the policy requirements with reinsurance requirements and agreements with the company.
An IA official stressed that according to the rules of practice and ethics issued by the insurance regulator, the insurer may not reject a customer’s insurance application or refrain from renewing the policy, or discriminate between different insured persons in relation to rates, terms and benefits of coverage, unless the insurer’s decision is based on technical or actuarial reasons or the experience of the company with the client. M